How to Sell a Fire-Damaged Home in California
Your 4 options, your legal obligations, and how to price what's left. A practical guide for CA homeowners in an extremely difficult situation.
If your California home was damaged or destroyed by fire, you have four primary options: sell the property as-is to a cash buyer, wait for your insurance settlement and then sell, rebuild and sell after reconstruction, or negotiate a short sale if you owe more than the property is now worth. Most fire-affected sellers choose the as-is route because it takes weeks instead of months or years. Disclosure is mandatory regardless of which path you choose. Call (213) 262-5092 to talk through your specific situation.
What This Guide Covers
Your 4 Options After a House Fire in California
A house fire doesn't just damage a structure. It creates a legal, financial, and logistical crisis that unfolds at the worst possible time. Before you make any decisions about your property, understand your four real options. Each has a different timeline, financial outcome, and risk profile. There is no universally correct answer. The right path depends on how much equity you had before the fire, whether you can wait, and your emotional capacity to manage a prolonged process.
The first step is getting a licensed structural engineer to assess the damage. This is not optional. The report will determine whether your property qualifies as a total loss, a partial loss, or a repairable structure. Your insurer will conduct their own inspection, but having an independent report in your hands before that conversation puts you in a stronger negotiating position.
Walking away from the property and stopping mortgage payments without a formal plan is the worst outcome. California non-judicial foreclosure will proceed regardless of the fire damage. Foreclosure stays on your credit report for seven years and may affect your ability to purchase again. If you are at risk of this, call (213) 262-5092 immediately. There is almost always a better path.
Selling As-Is: Who Buys Fire-Damaged Homes in California and at What Price
The market for fire-damaged homes in California is active but narrow. You will not sell through the traditional MLS to a family with a conventional mortgage. Banks will not lend on a property that is structurally compromised or declared uninhabitable. Your buyer pool is cash-heavy and transaction-experienced.
As-is buyers price fire-damaged homes using lot value, the cost-to-cure method, or a combination of both. They build in a profit margin for their risk and carrying costs, which is why the price is always below what the property would have fetched before the fire. Expect multiple offers if you hire the right agent and market the property correctly to this buyer segment.
Developers and Builders
Primarily interested in the lot. Will demolish and build new. Highest offer in desirable neighborhoods where new construction commands premium prices.
Offer basis: lot value + location premiumExperienced House Flippers
Purchase partial-loss properties with repairable structures. Use the ARV minus repair minus margin formula. Typically close faster than developers.
Offer basis: ARV minus cost-to-cure minus 15-20% marginAdjacent Neighbors or Community Buyers
Occasionally, a neighboring property owner wants the lot to expand. These buyers may pay closer to land value without the investor discount, but deals are harder to structure.
Offer basis: Land value (potentially slightly above)Get a No-Obligation Cash Offer Evaluation
Justin works with vetted cash buyers across Los Angeles County. Tell us your situation and we can give you a realistic range before you commit to anything.
California Disclosure Requirements for Fire-Damaged Properties
California has some of the most rigorous real estate disclosure laws in the country. Fire damage is a material fact under California Civil Code Section 1102, which requires sellers to complete a Transfer Disclosure Statement (TDS) for the sale of any residential property of 1 to 4 units. Material facts are conditions that would affect a reasonable buyer's decision to purchase or the price they are willing to pay.
Many sellers ask whether they can simply repair the damage and avoid disclosing it. The answer is no. California Civil Code Section 1710.2 requires disclosure of physical defects and structural damage even if the defect has been repaired. The legal standard is whether the condition existed, not whether it currently exists. Failing to disclose results in a buyer's right to rescind the sale, civil liability, and in egregious cases, fraud claims.
Transfer Disclosure Statement (TDS), CA Civil Code Section 1102: This is the foundational document. You must check the fire damage box and describe the extent. Every structural element affected must be documented. No exceptions for repaired damage.
Physical Defect Disclosure, CA Civil Code Section 1710.2: Explicitly covers structural damage, including fire damage. Covers roof, framing, foundation, electrical, plumbing, and HVAC even if those systems were partially repaired or replaced after the fire.
Insurance History Disclosure: Buyers have the right to know that an insurance claim was filed on the property. Your C.L.U.E. (Comprehensive Loss Underwriting Exchange) report, a claims history report from LexisNexis, will be visible to buyers and their lenders. Disclose the claim proactively rather than wait for them to discover it.
Natural Hazard Disclosure (NHD): If your property is in a designated fire hazard severity zone, State Responsibility Area, or Wildland-Urban Interface (WUI) zone, this must be disclosed on the NHD form. CAL FIRE maintains fire risk maps under PRC Sections 4201-4204.
AB 38 Home Hardening Documentation (if in High Fire Hazard Severity Zone): AB 38 (2019) requires sellers in High Fire Hazard Severity Zones to provide written documentation of a home hardening inspection or proof of required retrofits before closing. Failure to provide this documentation can delay or void the sale.
Code Violations and Building Department Notices: If the fire triggered any code violation notices or building department red tags, these must be disclosed. Any liens from code enforcement are also required disclosures and must be cleared or negotiated at closing.
You must disclose fire damage on the TDS even if it has been fully repaired. The legal standard in California is disclosure of the condition's existence, not its current state. "We fixed it so we don't have to say anything" is not a defense. This applies to cosmetic repairs as well as structural restoration.
Navigating Your Insurance Claim After a House Fire
Your homeowner's insurance policy is a contract, not a favor. Under California Insurance Code Section 2071, the standard fire insurance policy in California covers the structure, personal property, and Additional Living Expenses (ALE) during the period of displacement. ALE typically includes hotel costs, meals, and comparable rent. Keep every receipt from the day of the fire forward.
The insurance company's adjuster works for the insurance company, not for you. Their estimate of replacement cost or actual cash value may be significantly lower than what a rebuild would actually cost in today's market. If you believe the settlement offer is inadequate, you have the right to hire a public adjuster or an attorney who specializes in insurance claims before you sign anything. In California, major disaster declarations often expand your rights to appeal and extend the deadline for claim submission.
Assignment of Benefits: What It Is and Why It Can Hurt You
In the weeks after a fire, you may be approached by contractors or restoration companies offering to handle your claim in exchange for an Assignment of Benefits (AOB). An AOB is a legal document that transfers your insurance claim rights to that third party. California law has restricted the use of AOBs in residential property insurance after 2022 legislative changes, but they still appear in the field.
Never sign an Assignment of Benefits without reviewing it with a licensed public adjuster or real estate attorney first. An AOB can transfer control of your insurance settlement, create a mechanic's lien on your property before you have received any payment, and complicate or block a sale for months. If a contractor says "just sign this and we'll handle everything," stop and call an independent professional. This document can cost you tens of thousands of dollars and delay your ability to sell.
What Your ALE Coverage Actually Covers
Additional Living Expenses (ALE) under California Insurance Code Section 2071 covers the difference between your normal housing costs and the cost of your displacement housing. If you normally paid $2,500 per month in mortgage or rent and are now paying $4,500 for a comparable rental while displaced, ALE should cover the $2,000 difference. Keep all documentation. ALE coverage is time-limited, so understand your policy's cap and rebuild timeline implications before making decisions about when to sell.
Unsure how to position your home after the fire and insurance process? Justin has helped sellers navigate both sides of this situation.
Call (213) 262-5092How Fire-Damaged Property Is Priced in California
Pricing a fire-damaged home is not the same as pricing a distressed but intact property. There are two primary methods, and sophisticated buyers will use both and then choose the lower of the two to anchor their offer. Understanding these methods puts you in a stronger negotiating position when offers come in.
Method 1: Lot Value (Land-Only Pricing)
This approach treats the structure as having zero value and values only the underlying land. In neighborhoods where new construction demand is strong, lot value can represent 60 to 80 percent of the pre-fire home value. In less desirable areas, lot value may be 30 to 50 percent of pre-fire value. You can estimate lot value by looking at vacant land sales in the same area or by identifying recent teardown sales where the buyer demolished the structure shortly after purchase.
of pre-fire home value that lot value represents in desirable Los Angeles neighborhoods. In premium areas like Altadena, Pasadena, or NELA, the land itself holds most of the value.
Method 2: Cost-to-Cure (ARV Minus Repair)
This method starts with the After Repair Value (ARV), which is what the home would sell for if it were fully restored to its pre-fire condition. From that number, investors subtract the cost to cure all damage, then subtract a profit margin for their risk and carrying costs. The result is what they are willing to pay today.
Cost-to-Cure Formula
Example: ARV $900,000 minus $220,000 repair cost minus $150,000 margin = $530,000 maximum offer. This is why fire-damaged homes sell at 20-40% below ARV.
Net Proceeds Scenarios: What You Might Actually Walk Away With
Pre-fire value in a mid-tier LA neighborhood. Partial loss, structure 40% destroyed.
Pre-fire value in Pasadena, NELA, or similar. Lot value drives most of this.
Total loss in a VHFHSZ area post-Altadena-style fire. Insurance critical to outcome.
These ranges are illustrative. Every fire-damaged property is unique. The actual offer you receive depends on the degree of structural damage, whether asbestos or lead was disturbed, the state of the title, and how many motivated cash buyers are actively seeking deals in your specific neighborhood at the time you list.
What's My Fire-Damaged Home Worth in 2026?
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Get My Free Home ValuationFire Hazard Zone Disclosures in California (AB 38 and VHFHSZ)
California designates fire hazard severity zones under Public Resources Code Sections 4201 through 4204. These designations fall into three tiers: Moderate, High, and Very High Fire Hazard Severity Zone (VHFHSZ). The California Department of Forestry and Fire Protection (CAL FIRE) maintains the maps for State Responsibility Areas (SRAs), while local fire agencies designate zones within Local Responsibility Areas (LRAs).
If your property is in a High or Very High Fire Hazard Severity Zone, AB 38 (signed into law in 2019) adds a specific obligation for sellers: you must provide the buyer with documentation demonstrating that the home has completed a home hardening inspection or has had the required upgrades installed. Home hardening under AB 38 covers items like ignition-resistant vents, ember-resistant eaves, dual-pane windows, and deck surface materials. If your home was damaged or destroyed by fire, this documentation requirement still applies to whatever structure remains and must be addressed before close of escrow.
Your property's exact fire hazard zone designation is searchable on the CAL FIRE website at osfm.fire.ca.gov or through your county assessor. Even if your neighborhood is widely known to be high-risk, confirm the parcel-level designation before your disclosure documents are prepared. Some parcels within known fire corridors are designated at a different tier than their neighbors. Verify before disclosing.
Title Issues, Liens, and Mortgage Obligations After a Fire
A house fire does not extinguish your mortgage. Your loan documents remain in full force and effect. The deed of trust holder (your lender) has a secured interest in the property and in the insurance proceeds that flow from any claim on that property. Most standard mortgage agreements contain language requiring the borrower to insure the property and requiring insurance proceeds to be used for repair or applied to the loan balance.
When you file a fire insurance claim, your insurer is contractually obligated to notify your mortgage lender. For claims above a certain threshold (often $10,000 or $20,000, depending on the loan servicer), insurance checks are made payable jointly to you and your lender. You cannot cash these checks unilaterally. Your escrow officer or loan servicer will have a specific process for endorsing and disbursing these funds. If you are selling the property, the remaining mortgage balance is paid from sale proceeds at closing, just as in any normal transaction.
Mechanics Liens After Fire Damage
If you hired any contractors, restoration companies, or debris removal services after the fire, be careful about mechanic's lien risk. In California, any party who provides labor or materials to improve real property has the right to file a mechanic's lien within 90 days of completing their work (90 days for direct contractors, 30 days for subcontractors and material suppliers if no preliminary 20-day notice was served). A mechanic's lien attaches to the title and must be resolved before close of escrow. Order a preliminary title report early in the process to identify any liens that may have been filed without your knowledge.
Complex Title Situation After Fire Damage?
Justin coordinates directly with title companies, lenders, and escrow officers on fire-damage transactions. Call to talk through what's on your title.
The FAIR Plan: What It Is and How It Affects Your Sale
The California FAIR Plan Association is the state-mandated insurer of last resort for residential properties that cannot obtain coverage in the standard insurance market. Properties in high fire risk zones, particularly after major wildfire events reduce the number of private carriers willing to write policies in affected areas, often end up on the FAIR Plan.
If your home was insured under the FAIR Plan when the fire occurred, it is critical to understand what the policy does and does not cover. FAIR Plan policies historically provided dwelling coverage only, without the broader personal property, liability, and ALE provisions found in standard homeowner's policies. Many FAIR Plan policyholders supplement with a Difference in Conditions (DIC) policy to fill these gaps. If you had only a FAIR Plan policy without a DIC rider, your ALE coverage may be severely limited or absent.
FAIR Plan: What It Typically Covers
Dwelling replacement cost (up to policy limits) for fire damage. Some policies include extended replacement cost riders. Does not historically include personal property, ALE, or liability coverage unless specifically added.
FAIR Plan: What Buyers and Lenders Think
A property currently on the FAIR Plan signals fire-zone status. Conventional lenders often require full insurance as a loan condition, and FAIR Plan policies may or may not satisfy this requirement without a DIC supplemental policy. Cash buyers are generally less concerned. Disclose FAIR Plan status in your listing.
Post-Settlement FAIR Plan Status
If you sell the property as-is after filing a claim, the buyer (typically a developer or investor) will obtain their own insurance. Your FAIR Plan policy terminates at the close of escrow. The proceeds from your FAIR Plan claim are yours, subject to your mortgage lender's joint-payee rights.
FAIR Plan Claims Disputes
FAIR Plan settlement disputes are not uncommon after major fire events. If you believe your settlement offer is below actual replacement cost, you have the right to appraisal or mediation under your policy terms. Engage a public adjuster or coverage attorney before accepting a final settlement if you plan to use the proceeds for a rebuild.
FREE Weekly Workshop: First-Time Buyer Blueprint
Know someone looking to buy in LA after the fires? This free weekly session covers the full process including fire-zone considerations.
Reserve a Free SeatRealistic Timeline: From Fire to Closing in California
One of the most common mistakes I see fire-affected sellers make is underestimating how long the insurance and disclosure process takes, and therefore making decisions under false time pressure. Here is a realistic timeline for each scenario so you can plan accordingly.
Emergency Response and Documentation
File insurance claim within 24 hours. Photograph and video document all damage before any cleanup begins. Secure the property (board up, fencing). Arrange ALE housing if displaced. Begin collecting all receipts.
Independent Structural Evaluation
Hire a licensed structural engineer for an independent damage assessment. This is your anchor document. Do not allow the insurance adjuster's inspection to be the only evaluation. The engineer's report takes 5 to 10 business days.
Insurance Claim Processing
Your insurer sends an adjuster, prepares a scope of loss, and issues a settlement offer. Simple claims take 30 to 45 days. Disputed claims can take 90 to 180 days. After major declared disasters, timelines extend further. Do not sign a final release until you are satisfied with the settlement.
Prepare Legal Disclosures and Title Review
While the insurance process runs, prepare your TDS, NHD, and AB 38 documentation. Order a preliminary title report to identify any liens. Resolve any code enforcement notices from the building department.
List and Market to Cash Buyers (As-Is Path)
For the as-is sale path, list through an agent who knows the distressed buyer market. Market directly to investors, developers, and flippers. Expect 7 to 21 days to receive offers. Most serious buyers submit within the first 10 days.
Accept Offer and Open Escrow
Cash investor escrows close in 14 to 30 days. Coordinate with your lender regarding insurance proceeds if the property has a mortgage. Ensure all liens are cleared before close. Final walkthrough and deed recording complete the transaction.
| Sale Path | Estimated Timeline | Key Variables |
|---|---|---|
| Sell As-Is (Cash Buyer) | 30 to 60 days total | Insurance claim disputes, lien resolution, disclosure preparation |
| Settle Insurance First, Then Sell | 60 to 180+ days | Claim complexity, adjuster workload, whether a public adjuster is used |
| Rebuild and Then Sell | 18 to 36 months | Permit approval timeline, contractor availability, material supply chains |
| Short Sale (Underwater) | 60 to 150 days | Lender approval timeline, investor buyer availability, lien resolution |
5 Mistakes Fire-Affected Sellers Make in California
After working through distressed property transactions in Los Angeles County for 13+ years, these are the mistakes I see fire-affected sellers make most often. Each one costs time, money, or both.
XSigning an Assignment of Benefits Without Legal Review
Restoration contractors present AOBs as a convenience. They are a risk. An AOB transfers your claim rights to the contractor, can create liens on your property, and may delay your sale for months. Never sign one without independent legal or adjuster review.
XAccepting the First Insurance Settlement Offer
Insurers are not required to maximize your settlement. The first offer is frequently below replacement cost, especially in a high-construction-cost market like Los Angeles. A public adjuster or coverage attorney often recovers significantly more before you sign the final release.
XSelling Without Completing All Required Disclosures
The TDS, physical defect disclosures, NHD form, and AB 38 documentation are all required. Sellers who skip disclosure steps face post-closing rescission actions and civil liability. This risk does not go away after close. The statute of limitations for fraud in California is three years from discovery.
XPricing Based on Pre-Fire Comps Without Adjustment
Some sellers refuse to price below what neighboring intact homes sell for. Buyers do not pay intact-home prices for damaged properties. Overpricing a fire-damaged home causes it to sit on the market while carrying costs compound. The property eventually sells for less than a realistic early listing would have achieved.
XHiring a Generalist Agent Who Has No Fire-Sale Experience
Most real estate agents have never sold a fire-damaged property. The marketing approach, the disclosure package, the buyer network, and the negotiation dynamics are all different. You need an agent who knows the distressed buyer market and has dealt with insurance coordination, lien resolution, and complex escrow situations.
XWaiting Too Long Without a Plan
Carrying costs on a fire-damaged property add up fast: mortgage payments, property taxes, fire hazard insurance, security, debris removal, and ongoing maintenance of the site. Every month you delay without a clear plan costs real money. Clarity, even if painful, is almost always less expensive than uncertainty.
I've guided sellers through fire-damage transactions from partial loss to total lot sales in the Los Angeles market. Call Justin to get clear on your next step.
Call (213) 262-5092Quick Reference: Fire-Damaged Home Seller Cheat Sheet
| Your Situation | Best Option | Estimated Timeline |
|---|---|---|
| Need to sell fast, can't wait months | As-is sale to cash buyer | 30 to 60 days |
| Insurance claim disputed or unresolved | Hire public adjuster, then sell as-is | 60 to 120 days |
| Owe more than property is worth post-fire | Short sale with lender approval | 60 to 150 days |
| Have equity, can wait, want maximum value | Settle insurance, stabilize lot, then sell | 90 to 180 days |
| Pre-fire value high, rebuild makes financial sense | Full rebuild with permitted plans, then sell | 18 to 36 months |
| In VHFHSZ, can't get insurance | As-is or lot sale to developer; disclose FAIR Plan status | 30 to 60 days |
| Received an Assignment of Benefits request | Stop. Review with attorney or public adjuster first. | Review before any signature |
How Justin Helps Fire-Affected Sellers in Los Angeles County
In 13+ years of real estate in the Los Angeles market, I've worked with sellers in nearly every difficult situation: probate, divorce, pre-foreclosure, short sale, inherited properties, and fire damage. The fire-damaged transaction is one of the most emotionally and logistically complex because it combines an insurance claim, a legal disclosure process, a specialized buyer market, and often a mortgage lender that is now jointly involved in the insurance proceeds.
What I bring to a fire-damage sale is not just the standard MLS listing. I have relationships with vetted cash buyers, developers, and investors who are actively looking for fire-damaged properties in the LA market. I know how to structure the disclosure package so that buyers can evaluate the property with full information rather than discovering issues mid-escrow and demanding credits or walking. I coordinate directly with your insurer, your lender, and your escrow officer.
I also work on standard commission rates. There is no distressed-seller surcharge. Whether your pre-fire home was worth $600,000 or $3,000,000, you deserve the same professional representation. Call (213) 262-5092 or text to talk through your specific situation. There is no cost for an initial conversation, and I will tell you the truth about your options, not what you want to hear.
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Text (213) 262-5092 Call NowFrequently Asked Questions
Do I have to disclose fire damage when selling a home in California?
Yes. California Civil Code Section 1102 requires sellers to complete a Transfer Disclosure Statement (TDS). Fire damage is a material fact that must be disclosed whether or not the damage has been repaired. Failure to disclose can result in the buyer rescinding the sale, civil liability, and fraud claims. Even cosmetic fire repairs that were completed before listing must be noted. Reach Justin Borges at (213) 262-5092 to discuss how to structure your disclosures correctly.
Can I sell a fire-damaged home as-is in California?
Yes. Selling as-is is legal in California and is the most common path for fire-damaged properties. Cash buyers and investors purchase fire-damaged homes throughout Los Angeles County without requiring repairs. Expect to receive 20 to 40 percent below the After Repair Value in an as-is sale, depending on the extent of damage and your neighborhood's land value. Justin has relationships with active cash buyers for fire-damaged properties. Call (213) 262-5092.
Who buys fire-damaged homes in California?
The primary buyers are investors, developers, and experienced house flippers who purchase fire-damaged properties for cash at a discount, then repair and resell or hold as rentals. Occasionally, a neighboring property owner will pay closer to land value for the lot. Traditional financed buyers rarely purchase fire-damaged homes because conventional lenders will not fund properties with material structural damage or uninhabitability issues. An agent with distressed-sale experience will know how to reach the right buyers quickly.
How is a fire-damaged home priced?
The two most common methods are lot value (land-only pricing, ignoring the structure) and cost-to-cure (ARV minus repair cost minus investor profit margin). In high-demand Los Angeles neighborhoods, lot value can represent 60 to 80 percent of pre-fire home value. The actual offer you receive depends on the degree of structural damage, asbestos or lead exposure during the fire, the state of the title, and current buyer demand in your specific neighborhood.
What is the FAIR Plan and how does it affect my ability to sell?
The California FAIR Plan is the state-backed insurer of last resort for properties in high fire-risk zones that cannot obtain private coverage. If your home was insured under the FAIR Plan when the fire occurred, you must disclose this to buyers. A FAIR Plan policy does not prevent you from selling. However, buyers and their lenders will factor replacement insurance costs into their purchase decision. Cash buyers are generally unaffected by FAIR Plan status. Disclose it proactively in your listing materials.
What does AB 38 require for sellers in a fire hazard zone?
AB 38 (2019) requires sellers in a High Fire Hazard Severity Zone to provide documentation showing the property has completed a home hardening inspection or that the required retrofits have been made before close of escrow. Home hardening covers ignition-resistant vents, ember-resistant eaves, dual-pane windows, and deck materials, among other items. Failure to provide this documentation can delay or kill your sale. Check your parcel's fire hazard severity zone designation at the CAL FIRE OSFM website before listing.
Should I sign an Assignment of Benefits after my house fire?
Rarely, and never without independent legal review first. An Assignment of Benefits (AOB) transfers your insurance claim rights to a third party, typically a contractor or restoration company. This can create liens on your property, give someone else control over your settlement, and block a sale for months. California law has restricted AOBs in residential property insurance. If a contractor presents you with an AOB and says it's routine, stop and consult a public adjuster or real estate attorney before signing anything.
How long does it take to sell a fire-damaged home in California?
An as-is cash sale to an investor can close in 14 to 30 days from acceptance of offer. If you wait for your insurance settlement first, expect 30 to 180 additional days depending on claim complexity. Selling after a full rebuild takes 18 to 36 months in California due to permitting timelines. Most distressed sellers choose the as-is route for speed. Call Justin Borges at (213) 262-5092 to discuss your specific timeline constraints.
Can I sell a fire-damaged home if I still have a mortgage?
Yes, as long as the sale proceeds cover the outstanding loan balance. If fire damage has reduced the property value below your mortgage balance, a short sale may be required. California Civil Code 580e prohibits deficiency judgments after an approved short sale on an owner-occupied 1-to-4 unit property, so you generally cannot be sued for the remaining balance after a properly structured short sale. Justin has short sale experience and can coordinate with your lender.
Will mechanic's liens from fire restoration contractors affect my sale?
Yes, if they exist. California law gives contractors and material suppliers the right to file a mechanic's lien if they are not paid for work on your property. A lien attaches to the title and must be resolved before escrow can close. Order a preliminary title report early in your sale process to identify any liens that have been filed. If you discover a lien, consult a real estate attorney about your options, including bonding over the lien or negotiating a lien release.
Your Fire-Damaged Home Has Options. Let's Find the Right One.
No cost, no pressure. A real conversation about what your property is worth and which path makes sense for your situation.
- As-is cash buyer network across LA County
- Disclosure package structured correctly from day one
- Insurance, lender, and escrow coordination
Justin Borges | DRE #01940318 | eXp Realty | 680 E Colorado Blvd Suite 180, Pasadena CA 91101






